2016 has been a remarkable year for India, which witnessed two major economic developments - demonetisation and GST Bill. As citizens are still in the middle of coping up with these changes, upcoming Union Budget 2017 is expected to serve as a respite.
By Anil Arora
2016 has been a remarkable year for India, which witnessed two major economic developments – demonetisation and GST Bill. As citizens are still in the middle of coping up with these changes, upcoming Union Budget 2017 is expected to serve as a respite. Breaking the age-old colonial tradition to announce the budget in a specific interval i.e. last day of February, this year the government is all set to announce it a little earlier, i.e. 1st February, 2017.
Along with the entire nation, the textiles and apparel industry is eagerly awaiting and expecting significant developments that would generate a unified markets for retailers. Below mentioned are a few legitimate expectations of trade experts from the upcoming budget:
1. Clarity on GST
GST bill, one of the biggest reforms in India’s indirect tax structure, is soon expected to see the light of the day, in the upcoming Union Budget. Although GST rates are yet to be revealed, textile and apparel industry has high hopes pinned from its execution. It is predicted that prices for branded apparels might increase by about 12%, but on the other hand, disparity in terms of excise duty will shed off, effectively. Hence, a unified taxation system for retailers will finally fall into place, contouring to GST regime.
Being an export-oriented industry, apparel and textile sector has always been an invincible element of the country’s trade policy. Aligned with this, industry experts are sincerely hoping that textile industry would be positioned in the lowest tax structure slab.
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2. Exports will be streamlined
In the recent times, India’s exports have been declining by about 5-9% consistently. Through the upcoming budget and realization of GST, exporters are hoping to get an exclusive exemption from tax payments. However, alongside, it is also predicted that the government might continue with its 3% interest subsidy on exports. A major predicament which has been concerning exporters is the longevity of tax refund process, which further blocks their working capital. The forthcoming budget is expected to streamline processes, reducing the time period of tax refund to only two-week period and interest will be paid along with refunds paid after allotted time period.
Adoption of such deliberate measures, which might be in pipeline, will help in regaining impetus for the sector, further leading the country on a stairway to elevated economic growth.
3. Increase in abatement on MRP in case of excise duty
Textile and apparel industry is anticipating the forthcoming Union budget with their hopes firmly fixed on to getting some relief in excise duty, in terms of MRP. Last year, Finance Minister Arun Jaitley levied 2% excise duty on branded apparels and made-up textile articles with the price of Rs. 1000 or above. This year, relaxation in terms of excise duty is expected which will encourage manufacturing, leveraging the idea of ‘Make in India’ campaign as well.
Respite in excise duty will effectively pave the path of ease of doing business, while helping the sector get back on wheels with a fast paced growth.
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The last three budgets presented have been growth-oriented. In continuation with such upsurging trends, this year’s Union Budget is also expected to bring some relief to retailers and industry professionals, in terms of simplified registrations, ease of export and abatement in taxes.
(The author is co-founder, Sabhyata)